Dollar for Dollar

It never fails to amaze me how a dollar can get in the way of logical thinking.

After more than 2 decades of dealing with people in the real estate business, I am still being surprised by the pervading mentality of saving a dollar. The Buyers don’t want to give up the last $1,000 on the purchase of a house and the Sellers don’t want to give up the last $1,000 on the sale of their property.

If it’s because they both want to have the last word, I understand this because I know how important pride can be (and how expensive it can be). But I believe it’s more than this. I believe it’s because each party values the dollar, and that’s valid. But here’s how it works…

When you are the seller, $1,000 is $1,000. But to the buyer, $1,000 is (at today’s current mortgage rates) $4.25. THAT’S IT per month. Over a 5 year period, 60 months, that adds up to $255, not $1,000. Add to this the growth value of the property over the next 5 years at an average (during the last 14 years of 6%+ per annum) of a conservative amount of 4% (as per the Canadian government’s predictions), and the average house price in Toronto would go up about just under $80,000. Suddenly the $1,000 which is only really $255 has grown to a staggering $80,000.

This won’t happen if the buyer holds out for the last $1,000. And is we as realtors don’t drop our pants and take that money away from the mouths of our children by giving it up in order to make the deal, then that $80,000 goes up in smoke.

So, what should we do?

We should bring this bit of math to the bargaining table and explain to those people who cannot or will not understand that this makes more sense than holding out to have the last word.

And one more thing… of no less importance than what we just went through… if the interest rates rise by even a quarter point, even $10,000 more in the price of a property will not cover what the additional costs could be to the Buyer.

What is more important than the price of a property, are the growth value and the carrying costs for that property.

If the Buyers and Sellers cannot put things into perspective, it has to be us, the agents, who help them with the real values. That is, after all, our job, and if we can’t do this, then “dollar for dollar” we are not worth our commissions.

Sam Green,

Career Coach, Office Manager

sagreen@trebnet.com

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